Kudlow and Me

I battled Larry Kudlow on his show, CNBC's The Kudlow Report, over the Paycheck Fairness Act. Larry thinks women are doing just fine. After all, a newly released Bureau of Labor Statistics report shows the gender pay gap closing. Women now earn, on average, 83% of the median weekly wage of men, the highest level in history. And young women (if childless) are actually outearning their male counterparts.

Therefore, Larry posits: let the free market rule. Women don't need to get the government involved. I disagree. Let's look at the story behind the numbers. Of course we do!

Here's what I told Larry Kudlow: "It is morally imperative that a man and woman doing the same job should get the same pay." A moral imperative which I believe extends across sex, race, religion and sexual orientation. But as I've dissected various studies, I've come to understand that the Paycheck Fairness Act, although a step in the right direction, will not get women to where we need to be.

Last week, the Senate reintroduced the Paycheck Fairness Act. Why now? After all, it's been twenty months since the Paycheck Fairness Act, stewarded by then-Senator Hillary Clinton and Rep. Rosa DeLauro, cleared the House. Since then, the Senate has been content to do nothing. I believe women can thank the meteoric rise of the Republican women. Now the Democrats actually have to work to keep women's votes. And what better way than the long overdue issue of equal pay for equal work.

But, time is of the essence. To get to the 60 votes needed in 2009 to pass the Lilly Ledbetter Fair Pay Act (predecessor to the Paycheck Fairness Act) it took the combined forces of Democrats plus the Republican women senators. Before the anticipated seat shift in November, we all need to contact our senators right away and demand equal pay for equal work (here's the Senate directory.)

And why? Because the most important modern day women's issue is economic security. While poverty statistics are staggering (1 in 7 Americans now live below the poverty line), women continue to be disproportionately impacted. Women also compose the majority of foreclosures and bankruptcies. And women who are not economically secure are often forced to stay, along with their children, in abusive relationships.

The Paycheck Fairness Act will be a step in the right direction. While the Lilly Ledbetter Fair Pay Act effectively extended the window of time in which women can sue for pay discrimination, the Paycheck Fairness Act will help ensure that women get paid equally for doing the same job as men.

But equal pay for equal work is just a small part of the overall problem. A 2009 PayScale study found that on average, women make 94% of what men make for doing the same job (see data here). Women who make over $100,000 suffer a much larger pay disparity. But overall, as summarized by Catherine Rampell in an NYTarticle, there is no Machiavellian plot:

The implication is that in most jobs where a wage gap exists, it is probably not due to overt discrimination, with bosses deciding, Mad Men-style, that women should receive unequal pay for equal work. Rather, in most jobs, the different career choices that men and women make -- or perhaps the different career opportunities men and women have available to them -- account for big differences in pay.

When we get behind the numbers of these studies, here's the real culprit: women do not have equal access to high paying jobs. This is the real root problem that we must address to ensure women's economic security.

Part of the issue is that women have long gravitated to what some refer to as the Pink Ghetto: taking lower wage jobs in professions such as nursing and teaching. These jobs may have been secure during the current economic downturn, which accounts for the vast majority of the closing gender pay gap, but when boom times return, these will still be low paying jobs. Meanwhile, traditionally male jobs, such as construction, will return to being high paying when the economy picks up again.

I believe the biggest culprit of why the pink ghetto exists and thrives is this: women do not have a welcome place in high paying corporate fields. Take for example the field of finance: in the last decade 141,000 (-2.6%) women have left this high paying field, while 389,000 (9.6%) men have been added. As the recent Goldman Sachs discrimination lawsuit illustrates, many of the remaining women live in fear. No wonder women leave!

To get women true economic security, here's what we need to do: we need to increase women's representation in corporate management. And not just at the very top -- or the "glass ceiling." What we really must address is what my colleague Avivah Wittenberg-Cox describes in her recent book How Women Mean Business as "gender asbestos": "In every company, the number of women relative to men drops at almost every management layer -- almost from the very first one."

Here's what I told Larry Kudlow: I'll give you your long-term "free market fix." How? In the short to medium-term, corporations need to focus on diversity. Why? Because it's simply good business, as study after study demonstrates. Women should have three seats on every board, and to borrow a notion from Congresswoman Maloney's The 30 Percent Solution, women should hold 30% of management positions up the chain (currently, that number is closer to 15%).

Once we get there, we will have Larry's free market solution. When we get women into positions of leadership, the rest will take care of itself -- without requiring regulation or government interference. And the best news: our corporations will benefit and thrive from gender diversity!